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Guthrie v. Lady Jane Collieries Inc.

December 16, 1983

RANDALL L. GUTHRIE, THOMAS D. CHAMBERS, BOYD R. GUTHRIE, ALBIEN J. KOS, MELVIN C. BUMBARGER, DELVIN COLE, RAY R. ALVETRO AND WARREN C. HAMILTON, ON BEHALF OF THEMSELVES AND ALL OTHER EMPLOYEES OF LADY JANE COLLIERIES, INC., SIMILARLY SITUATED, APPELLANTS
v.
LADY JANE COLLIERIES, INC., A PENNSYLVANIA CORPORATION, APPELLEES; RANDALL L. GUTHRIE, THOMAS D. CHAMBERS, BOYD R. GUTHRIE, ALBIEN J. KOS, MELVIN C. BUMBARGER, DELVIN COLE, RAY R. ALVETRO AND WARREN C. HAMILTON, ON BEHALF OF THEMSELVES AND ALL OTHER EMPLOYEES OF LADY JANE COLLIERIES, INC., SIMILARLY SITUATED, APPELLEES V. LADY JANE COLLIERIES, INC., A PENNSYLVANIA CORPORATION, APPELLANT



On Appeal from the United States District Court for the Western District of Pennsylvania.

Gibbons, Garth and Higginbotham, Circuit Judges.

Author: Garth

Opinion OF THE COURT

GARTH, Circuit Judge:

Under the Fair Labor Standards Act (FLSA), 29 U.S.C. § 207(a) (1976), employees are entitled to overtime compensation, at the rate of one and one-half times the regular rate, for time worked in excess of forty hours per week. Exempt from this provision is any "employee employed in a bona fide executive, administrative, or professional capacity." Id. Section 213(a). "Executive capacity" is further defined in regulations promulgated by the Department of Labor. 29 C.F.R. §§ 541.1, 541.101-541.119 (1983).

This appeal primarily requires that we determine whether certain employees were "executives," and thus exempt, within the meaning of the relevant statutes and regulations. If so, they were not entitled to the overtime pay they claimed. If not, overtime compensation and possibly liquidated damages should have been paid to them. The district court resolved the issue of who was, and who was not, exempt on motions for summary judgment. We affirm in part and reverse in part.

I.

Lady Jane Collieries, Inc. (Lady Jane), operates a coal mine in Penfield, Pennsylvania. Among its employees at the times in question were Randall Guthrie, Thomas Chambers, Boyd Guthrie, Albien Kos, Melvin Bumbarger, Delvin Cole, Ray Alvetro, and Warren Hamilton. All eight employees filed suit against Lady Jane, claiming that they had been unlawfully denied overtime pay. Lady Jane contended that all were exempt "executives."

On cross-motions for summary judgment, the district court held R. Guthrie, B. Guthrie, Kos, Bumbarger, Cole, and Hamilton to be exempt, and granted Lady Jane's motion. The district court found Alvetro and Chambers to be nonexempt, and granted their motions. The court refused to grant liquidated damages to Alvetro and Chambers under 29 U.S.C. §§ 216(b) and 260 (1976). Guthrie v. Lady Jane Collieries, Inc., 556 F. Supp. 164 (W.D. Pa. 1983).

The employees filed timely appeals to this court: Alvetro and Chambers appeal from the denial of liquidated damages, and the other employees appeal from the grant of summary judgment in Lady Jane's favor. Lady Jane appeals from the grant of summary judgment as to Alvetro, but does not appeal from the judgment in favor of Chambers.

II.

A.

R. Guthrie, B. Guthrie, Kos, Bumbarger, and Cole

Summary judgment may be granted if the pleadings and other evidence show that there is no genuine issue of material fact and that the movant is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c). On review of a grant of summary judgment we must apply the same test, viewing the evidence most favorably to the party opposing the motion. Goodman v. Mead Johnson & Co., 534 F.2d 566, 573 (3d Cir. 1976), cert. denied, 429 U.S. 1038, 97 S. Ct. 732, 50 L. Ed. 2d 748 (1977).

Exemptions from the FLSA are to be narrowly construed against the employer. Mitchell v. Kentucky Finance Co., 359 U.S. 290, 295, 3 L. Ed. 2d 815, 79 S. Ct. 756 (1959). The burden of proof is on the employer to establish an exemption. See Idaho Sheet Metal Works, Inc. v. Wirtz, 383 U.S. 190, 15 L. Ed. 2d 694, 86 S. Ct. 737 (1966). The district court held (and the parties do not dispute) that the two Guthries, Kos, Bumbarger, and Cole all worked as section foremen in the mine, and all performed the same duties. See 556 F. Supp. at 166. Because the section foremen earned more than $250 per week, the regulation applicable to determine their status as executives is the so-called "short test" regulation:

An employee who is compensated on a salary basis at a rate of not less than $250 per week . . . and whose primary duty consists of the management of the enterprise . . . or subdivision thereof, and includes the customary and regular direction of the work of two or more other employees therein, shall be deemed to meet all the requirements of this section.

29 C.F.R. § 541.1(f) (proviso) (1983). Both parties concede that all five employees satisfy the "customary and regular direction" requirement of the test. The dispute between Lady Jane and these employees centers on whether the employees meet the "primary duty of management" requirement.

B.

"Primary duty" within the meaning of the regulation is further defined in 29 C.F.R. § 541.103:

A determination of whether an employee has management as his primary duty must be based on all the facts in a particular case. The amount of time spent in the performance of the managerial duties is a useful guide in determining whether management is the primary duty of an employee. In the ordinary case it may be taken as a good rule of thumb that primary duty means the major part, or over 50 percent, of the employee's time. Thus, an employee who spends over 50 percent of his time in management would have management as his primary duty. Time alone, however, is not the sole test, and in situations where the employee does not spend over 50 percent of his time in managerial duties, he might nevertheless have management as his primary duty if the other pertinent factors support such a conclusion. Some of these pertinent factors are the relative importance of the managerial duties as compared with other types of duties, the frequency with which the employee exercises discretionary powers, his relative freedom from supervision, and the relationship between his salary and the wages paid other employees for the kind of nonexempt work performed by the supervisor.

It is undisputed that the section foremen, as a group, spent no more than an average of 44% of their time performing work that was concededly managerial in character. Some of the five, however, spent more time on managerial tasks, and some, less. See 556 F. Supp. at 167. We need not decide whether, as is urged by the five foremen, employees performing the same duties may be treated as a class in determining the application of this regulation, because we hold that all five employees satisfied the "short test." The district court also reached that same conclusion. In doing so, the district court stated:

While it is a useful rule of thumb in ordinary cases to say that management is the primary duty of an employee spending more than half his time in performing management functions, nevertheless time spent is not the sole test, and if the circumstances demonstrate the existence of bona fide executive authority and functions, the employee may properly be treated as exempt even if more than 50% of his time is devoted to non-exempt activities.

The 44% average seems clearly to be substantial enough to satisfy the 50% rule of thumb, in the light of what has been said before regarding the non-crucial character of that rule. In any event Bumbarger with 57% and Cole with 51.9% qualify. R. L. Guthrie's percentage was 47.22%, Boyd R. Guthrie's 31.65%, Kos's 33%. These are enough to establish bona fide substantial performance of management functions. The importance of such functions suffices to make them the employees' "primary duty." The section foremen are "in charge" of operation of their section of ...


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